Victoria market’s overvaluation stemming from supply issues

Victoria market’s overvaluation stemming from supply issues

In its latest quarterly assessment of markets nationwide, the Canada Mortgage and Housing Corp. cited Victoria as one of the cities that are now exhibiting strong evidence of problematic conditions, and pointed at scarcity as a leading cause.

“The supply of existing houses for sale is limited, with active listings at their lowest point since 2003, a time when price growth was similarly strong.” CMHC’s chief economist Bob Dugan stated on January 26, as quoted by the Times Colonist.

As of the end of 2016, the number of properties listed for sale through the Victoria Real Estate Board’s MLS sharply declined by 41 per cent year-over-year, down to 1,493 listings.

This accompanied record-breaking sales volume in the capital region, reaching 10,622 last year. Price growth has not seen respite as well, with the benchmark value for a single-family home in downtown Victoria increasing by 24 per cent year-over-year (up to $758,500).

Other markets that have been similarly tagged by the CMHC with overvaluation included Vancouver, Toronto, Hamilton, Regina, and Saskatoon.

The conditions in these markets indicate “that home-price growth may be driven by speculation as it is outpacing what economic fundamentals like migration, employment and income can support.”

“For this reason, homebuyers should ensure that their purchases are aligned with their needs as well as the long-term market outlook,” Dugan said.